In 2021, the estimated GDP of the ASEAN region amounted to USD3.36 trillion, with the manufacturing sector contributing approximately 23%. ASEAN’s changing demographics, geo-political shifts and favourable government policies provide a strong foundation for its member states to capture growth in these manufacturing segments. However, volatility and uncertainty remain high as armed conflicts, geo-political tensions and sky high inflation dominate the headlines. ASEAN manufacturers are dealing with a myriad of challenges ranging from supply chain disruptions to focusing on sustainability efforts.
In today’s discussion, our esteemed panel comprised speakers from Beyonics, Elecon, First Philec, Thai Union and technology partner Oracle, who came together to share their perspectives on how technologies such as big data analytics, artificial intelligence/machine learning and IoT can help in delivering financial performance and exceed market requirements from quality to sustainability.
According to the 2021 AIBP Enterprise Innovation Survey, 46.6% of respondents indicated that their priorities over the next 2-4 years is to deliver Operational Excellence with Cost Reduction, and the 2nd priority on the list is to Improve Resilience and Agility at 21.2%.
Building the Business on Data
Through the discussion, the panelists highlighted the importance of data in their organisations. Dr. Stefan Mairhofer, Data Science Lead, Thai Union, a seafood based food producer, shared that business units in his organisation realise that there is a need around intelligent solutions, however this is a journey which takes time. There is a huge opportunity to understand how things in the organisation are connected. The challenge here is to connect new infrastructure that is being built with legacy platforms, so that they can operate together. Dr. Stefan thinks that this is really where they need to bring in new technologies or think in terms of the underlying digital infrastructure to manage that data, to bring it together and enable it for the data scientists to to extract knowledge, make sense of it and maximise its value.
Vincent Eng, Chief Information Officer, Beyonics, a precision manufacturer shared that one of the the one key technologies that they are looking to ramp on is analytics. He is working closely with Oracle Fusion on the fusion data analytics warehouse, to configure and connect their ERP and other core systems. One of the key objectives in pushing for analytics is to introduce dashboarding and show key KPIs in real time, allowing management to have visibility on these metrics and better decision making capabilities, which will improve business performance.
Derrick Degay, Corporate Planning and Development Head, First Philec, a distribution transformer manufacturer, shared that they are looking to IoT to enable data collection, as part of their business model is to have their boring transformers and electrical equipment transformed into smart ones. By embedding sensors and IoT, a smart platform can be developed which will make it easier for their customers to manage their assets. The data collected and transformed into insights will provide their customers with the ability to reduce mean time between downtime. More importantly, the data would allow predictions of downtime on the machines and the service crew of their customers could actually replace the equipment, before the downtime happens. The data and the smart platform allows their customers’ operations to be more sustainable and profitable. This provides their customers with a strong value proposition and they won’t mind a 5 to 10% increase, because the cost of the revenue of the electricity sales would be much higher.
Aligning Profitability and Sustainability in Manufacturing
Michael D. Lim, GTM Leader for ERP & Digital Supply Chain, APAC, Oracle, recounted a conversation with a CFO recently on obstacles and challenges of aligning sustainability and profitability. Ideally, they would like to be able to eliminate recalls, waste, have a shorter time to market and have improved performance over the product life cycle. One of the key challenges cited is to really define the KPIs that applies to both ESG, sustainability and how they would like to financial performance.
As investments into ESG and sustainability grows larger over time, it becomes more critical for them to identify and measure these metrics and KPIs. What they would really like is also to be able to monitor the performance of KPIs in real time, and be provided with insights based on the data.
Elaborating further on aligning sustainability with First Philec’s business of manufacturing transformers, Derrick also shared that it was important to actively engage with their customers and explain the benefits of a sustainable product, because there’s a certain threshold of price that will be passed on. It is important for businesses to understand what is acceptable for their customers. For First Philec, one of the key initiatives is to reduce the amount of waste produced, and this was achieved by designing and building a supergreen transform which is 100% recyclable or biodegradable. The end product makes good business sense and is also aligned with their ESG goals. Derrick also elaborated that the approach to sustainability, where they invest, not for the sake of being sustainable or complying to ESG, but rather, because it’s the right thing to do.
Umang Gupta, Business Systems Manager-Benzlers & Radicon Group, Elecon, a gear manufacturer shared that as far as the ESG is concerned, they tend to start simple, for example reducing paper as a way of reducing carbon footprint in the organisation. This effort required engagement and collaboration across stakeholders and once it was proven successful, it was then scaled all across Europe, UK in the USA and measuring the amount of paper being bought is a KPI that was watched. Umang also highlighted that in his business, they use different kinds of oil and grease, so his engineering team has been working quite hard and has been very successful in actually recommending to their customers, rather than going with the standard oils increase move towards food grade products, or biodegradable products just to help the environment a little bit, so they regularly monitor the amount of oil and grease, that is being used, comparing the biodegradable ones to the regular ones.
Dr. Stefan also elaborated that some KPIs that are helpful in aligning both profitability and sustainability, for example minimizing energy and utility consumption would definitely help in terms of operation costs. Technology has allowed his organisation to get a much better and detailed look at what’s going on and provides the ability for his teams to monitor the operational metrics closely. Additionally, the technology enables the understanding of what the resources are, how it can be utilized in the most optimal way, how operations can be configured in a way that the material is utilised in the most efficient way without producing any waste.
Vincent highlighted that the IT team is already seen as a key business unit, not one that just provides back end support to the business. With this in mind, sustainability and ESG issues should be part of the team’s consciousness from the onstart and this feeds into the planning process with an understanding of the impact on the organisation’s profit and earnings. His approach was to come up with a strategy to drive automation towards industry 4.0. Analytics that then becomes available from the data, can be used to perform preventive management, maintenance and overall be more proactive in his organisation’s manufacturing process. Ultimately, echoing what Dr. Stefan mentioned, the investments in technology can be aligned for improved operational excellence and at the same time allow the business to be able to make use of its resources and reduce wastage.
AIBP Focus is a series of discussions held online which brings together a focus group of ASEAN stakeholders to discuss topics related to enterprise technology adoption in the region. Focus group discussion will centre on a specific industry or technology solution. (Check out another relevant session on Rethinking Supply Chains).
Join us in September, where the Finalists of the 2022 ASEAN Enterprise Innovation Awards will be showcasing their innovation projects for their organisation. Register here.
18 August 2022